Stimulating Regulatory Compliance and Ethical Behavior of Organizations: a Review

Abstract

Regulators aim to influence behavior of regulatees, such as compliance (i.e., following rules and regulations), but also ethical behavior (i.e., doing the right thing, irrespective of the rules and regulations). A literature review was conducted to collect, summarize, and analyze empirical evidence on how regulators can stimulate regulatees’ compliance and ethical behavior. We introduce a novel framework, in which we propose that regulatory actions influence compliance and ethical behavior through regulatees’ capability, opportunity, and motivation. Combining the findings of 35 articles, we showed that studies on ‘sanctions’ and 'cooperation' demonstrated mixed results regarding their effectiveness, whereas ‘inspections’ were found more effective. Notably, the subcomponents psychological capability, social opportunity, and reflective motivation were more effective in stimulating behavior than physical capability, physical opportunity, and automatic motivation. We reflect on how these insights can be used by regulators to increase their effectiveness, as well as for the aim to further develop regulatory theory.